Temporary extension of period by which commencement lump sum may precede pension
	1 In Schedule 29 to FA 2004 (authorised lump sums under registered pension schemes) after paragraph 1 (conditions for a lump sum to be a pension commencement lump sum) insert—
	“1A (1) Paragraph 1(1)(c) is to be omitted when deciding whether a lump sum to which this paragraph applies is a pension commencement lump sum.
	(2) This paragraph applies to a lump sum if—
	(a) the sum is paid in respect of a money purchase arrangement,
	(b) the sum is paid before the member becomes entitled to the sum,
	(c) either—
	(i) the sum is paid on or after 19 September 2013 but before 6 April 2015, or
	(ii) the sum is paid before 19 September 2013, a contract for a lifetime annuity is entered into to provide the pension in connection with which the sum is paid, and on or after 19 March 2014 the contract is cancelled, and
	(d) the member becomes entitled to the sum before 6 October 2015.
	(3) Where—
	(a) a lump sum to which this paragraph applies is a pension commencement lump sum but would not be a pension commencement lump sum if sub-paragraph (1) were omitted, and
	(b) the lump sum is paid to the member in connection with a pension under the scheme to which it is expected that the member will become entitled (“the expected pension”), no lump sum paid to the member out of the expected-pension fund is a pension commencement lump sum; and here “the expected-pension fund” means the sums and assets that from time to time represent the sums and assets that, when the lump sum mentioned in paragraph (a) was paid, were held for the purpose of providing the expected pension.
	(4) For the purposes of sub-paragraph (2), if the circumstances are as described in sub-paragraph (2)(c)(ii), the member is treated as not having become entitled to the arranged pension as a result of the cancelled contract having been entered into; and here “the arranged pension” means the pension that would have been provided by that contract had it not been cancelled.”
	Temporary relaxation to allow transfer of pension rights after lump sum paid
	2 (1) In Schedule 29 to FA 2004 after paragraph 1A insert—
	“1B (1) When deciding whether a lump sum to which this paragraph applies is a pension commencement lump sum—
	(a) paragraph 1(1)(aa) and (c) and (3) are to be omitted,
	(b) paragraph 1(4) is to be treated as referring to the actual pension (see sub-paragraph (2)(h) of this paragraph), and
	(c) paragraph 2(2) is to be treated as referring to the arrangement under which the member was expected to become entitled to the expected pension (see sub-paragraph (2)(b) of this paragraph).
	(2) This paragraph applies to a lump sum if—
	(a) the sum is paid in respect of a money purchase arrangement,
	(b) the sum is paid to the member in connection with a pension under a registered pension scheme to which it is expected that the member will become entitled (“the expected pension”),
	(c) the expected pension is income withdrawal, a lifetime annuity or a scheme pension,
	(d) the sum is paid before the member becomes entitled to the expected pension,
	(e) either—
	(i) the sum is paid on or after 19 September 2013 but before 6 April 2015, or
	(ii) the sum is paid before 19 September 2013, a contract for a lifetime annuity is entered into to provide the expected pension, and on or after 19 March 2014 the contract is cancelled,
	(f) the sum is not repaid at any time before 6 October 2015,
	(g) before the member becomes entitled to the expected pension, there is a recognised transfer of the sums and assets that immediately before the transfer represent the sums and assets that when the sum was paid were held for the purpose of providing the expected pension,
	(h) the member becomes entitled before 6 October 2015 to a pension under the scheme to which the recognised transfer is made (“the actual pension”),
	(i) the actual pension is income withdrawal, a lifetime annuity or a scheme pension, or some combination of them, and
	(j) all of the sums and assets that represent the sums and assets transferred by the recognised transfer are used to provide the actual pension.
	(3) If a lump sum to which this paragraph applies is a pension commencement lump sum, any lump sum paid—
	(a) to the member,
	(b) by the scheme to which the recognised transfer mentioned in sub-paragraph (2)(g) is made or by any other registered pension scheme (including the scheme from which the transfer was made), and
	(c) in connection with the member’s becoming entitled to the actual pension,
	is not a pension commencement lump sum.
	(4) For the purposes of sub-paragraph (2), if the circumstances are as described in sub-paragraph (2)(e)(ii), the member is treated as not having become entitled to the expected pension as a result of the cancelled contract having been entered into.”
	(2) In section 166(2) of FA 2004 (time at which a person becomes entitled to a lump sum)—
	(a) before paragraph (a) insert—
	“(za) in the case of a pension commencement lump sum to which paragraph 1B of Schedule 29 applies (certain sums paid before 6 April 2015), immediately before the person becomes entitled to the actual pension (see paragraph 1B(2)(h) of that Schedule),”, and
	(b) in paragraph (a) for “of a” substitute “of any other”.
	Temporary relaxation to allow lump sum to be repaid to pension scheme that paid it
	3 In Chapter 3 of Part 4 of FA 2004 (payments by registered pension schemes) after section 185I insert—“
	Repayments of lump sums
	185J Effect of repayment of certain pre-6 April 2015 lump sums
	‘(1) For the purposes of this Part—
	(a) a lump sum to which this section applies is treated as never having been paid, and
	(b) the payment by which it is repaid is treated as not being a payment.
	(2) This section applies to a lump sum if—
	(a) the sum is paid by a registered pension scheme to a member of the scheme in respect of a money purchase arrangement,
	(b) the sum is paid to the member in connection with a pension under the scheme to which it is expected that the member will become entitled (“the expected pension”),
	(c) the expected pension is income withdrawal, a lifetime annuity or a scheme pension,
	(d) the sum is paid before the member becomes entitled to the expected pension,
	(e) either—
	(i) the sum is paid on or after 19 September 2013 but before 6 April 2015, or
	(ii) the sum is paid before 19 September 2013, a contract for a lifetime annuity is entered into to provide the expected pension, and on or after 19 March 2014 the contract is cancelled,
	(f) before the member becomes entitled to the expected pension, the member repays the sum to the pension scheme that paid it, and
	(g) the repayment is made before 6 October 2015.
	(3) For the purposes of subsection (2), if the circumstances are as described in subsection (2)(e)(ii), the member is treated as not having become entitled to the expected pension as a result of the cancelled contract having been entered into.”
	Calculation of “applicable amount” in certain cases
	4 In paragraph 3 of Schedule 29 to FA 2004 (pension commencement lump sums: applicable amount) after sub-paragraph (8) insert—
	“(8A) Sub-paragraphs (1) to (8) have effect subject to the following—
	(a) if—
	(i) paragraph 1A or 1B applies to the lump sum,
	(ii) the lump sum is paid more than 6 months before the day on which the member becomes entitled to it,
	(iii) a contract for a lifetime annuity is entered into to provide the pension in connection with which the lump sum is paid, and
	(iv) on or after 19 March 2014 the contract is cancelled,
	the applicable amount is one third of the annuity purchase price that would have been given by sub-paragraphs (4) to (5) in the case of that annuity had the contract not been cancelled, and
	(b) if—
	(i) paragraph 1A or 1B applies to the lump sum,
	(ii) the lump sum is paid more than 6 months before the day on which the member becomes entitled to it, and
	(iii) paragraph (a) does not apply,
	the applicable amount is one third of the sums, plus one third of the then market value of the assets, held at the time the lump sum is paid for the purpose of providing the pension at that time expected to be the pension in connection with which the lump sum is paid.
	(8B) For the purposes of sub-paragraph (8A)(a)(ii), the member is treated as not having become entitled to a pension as a result of the cancelled contract having been entered into.”
	Expected pension commencement lump sums treated as trivial commutation lump sums
	5 (1) In section 166(1) of FA 2004, in the lump sum rule, omit the “or” after paragraph (f), and after paragraph (g) insert “, or
	(h) a transitional 2013/14 lump sum.”
	(2) In Schedule 29 to FA 2004, after paragraph 11 insert—
	“Transitional 2013/14 lump sum, and its related trivial commutation lump sum
	11A (1) A lump sum is a transitional 2013/14 lump sum for the purposes of this Part if—
	(a) the sum (“the earlier sum”) is paid to the member in connection with a pension under a registered pension scheme to which it is expected that the member will become entitled (“the expected pension”),
	(b) the earlier sum is paid before the member becomes entitled to the expected pension,
	(c) either—
	(i) the earlier sum is paid on or after 19 September 2013 but before 27 March 2014, or
	(ii) the earlier sum is paid before 19 September 2013, a contract for a lifetime annuity is entered into to provide the expected pension, and on or after 19 March 2014 the contract is cancelled,
	(d) all of the sums and assets for the time being representing the sums and assets that when the earlier sum was paid were held for the purpose of providing the expected pension are, before the member becomes entitled to the expected pension, used in paying a further lump sum to the member (“the further sum”),
	(e) the further sum is paid on or after 6 July 2014 but before 6 April 2015, and
	(f) the further sum is a trivial commutation lump sum (see sub-paragraph (2)).
	(2) Sub-paragraph (4) applies when deciding under paragraph 7 whether the further sum is a trivial commutation lump sum in a case where the earlier sum is paid before the nominated date (see paragraph 7(3) for the meaning of “the nominated date”).
	(3) If the earlier sum is a transitional 2013/14 lump sum, and the earlier sum and the further sum are not the only lump sums paid under registered pension schemes to the member, sub-paragraph (4) applies when deciding under paragraph 7 whether any other lump sum paid under a registered pension scheme to the member is a trivial commutation lump sum.
	(4) If this sub-paragraph applies, the payment of the earlier sum is to be treated for the purposes of paragraph 8(1)(b) as a benefit crystallisation event—
	(a) which occurs when the earlier sum is paid, and
	(b) on which the amount crystallised is the amount of the earlier sum.
	(5) If the earlier sum is a transitional 2013/14 lump sum, and only the sums and assets mentioned in sub-paragraph (1)(d) are used in paying the further sum, section 636B of ITEPA 2003 applies in relation to the further sum with the omission of its subsection (3).
	(6) If the earlier sum is a transitional 2013/14 lump sum, and the sums and assets mentioned in sub-paragraph (1)(d) are used together with other sums and assets in paying the further sum—
	(a) section 636B of ITEPA 2003 applies in relation to the further sum as if instead of the further sum there were two separate trivial commutation lump sums as follows—
	(i) one (“the first part of the further sum”) consisting of so much of the further sum as is attributable to the sums and assets mentioned in sub-paragraph (1)(d), and
	(ii) another consisting of the remainder of the further sum,
	(b) the first part of the further sum is to be treated for the purposes of section 636B of ITEPA 2003 as having been paid immediately before the remainder of the further sum,
	(c) section 636B of ITEPA 2003 applies in relation to the first part of the further sum with the omission of its subsection (3), and
	(d) for the purposes of applying section 636B(3) of ITEPA 2003 in relation to the remainder of the further sum, the rights to which the first part of the further sum relates are to be treated as rights that are not uncrystallised rights immediately before the remainder of the further sum is paid.
	(7) For the purposes of sub-paragraph (1), if the circumstances are as described in sub-paragraph (1)(c)(ii), the member is treated as not having become entitled to the expected pension as a result of the cancelled contract having been entered into.”
	(3) In section 636A of ITEPA 2003 (income tax exemption for certain lump sums)—
	(a) in subsection (1) after paragraph (c) insert—
	“(ca) a transitional 2013/14 lump sum,”, and
	“transitional 2013/14 lump sum”,”.
	(4) In section 280(2) of FA 2004 (index of expressions) at the appropriate place insert—
	
		
			 “transitional 2013/14 lump sum paragraph 11A of Schedule 29”. 
		
	
	Small pot lump sums
	6 (1) In the Registered Pension Schemes (Authorised Payments) Regulations 2009 (S.I.2009/1171) after regulation 3 insert—
	“3A (1) This regulation applies to a lump sum if—
	(a) the sum (“the earlier sum”) is paid under a registered pension scheme to a member of the scheme,
	(b) the earlier sum is paid to the member in connection with a pension under a registered pension scheme to which it is expected that the member will become entitled (“the expected pension”),
	(c) the earlier sum is paid before the member becomes entitled to the expected pension,
	(d) either—
	(i) the earlier sum is paid on or after 19 September 2013 but before 27 March 2014, or
	(ii) the earlier sum is paid before 19 September 2013, a contract for a lifetime annuity is entered into to provide the expected pension, and on or after 19 March 2014 the contract is cancelled,
	(e) all of the sums and assets for the time being representing the sums and assets that when the earlier sum was paid were held for the purpose of providing the expected pension are, before the member becomes entitled to the expected pension, used in paying a further lump sum to the member (“the further sum”),
	(f) the further sum is paid on or after 6 July 2014 but before 6 April 2015, and
	(g) either—
	(i) the payment of the further sum is a payment described in regulation 11, 11A or 12, or
	(ii) the further sum is a trivial commutation lump sum within paragraph 7A of Schedule 29 and the earlier sum is the pension commencement lump sum in connection with which the further sum is paid.
	(2) If this regulation applies to the earlier sum, and the payment of the further sum is a payment described in regulation 11, 11A or 12—
	(a) the payment of the earlier sum is a payment of a prescribed description for the purposes of section 164(1)(f), and
	(b) section 636A of ITEPA 2003 (exemption from income tax for certain lump sums) applies in relation to the earlier sum as if the earlier sum were a pension commencement lump sum.
	(3) When deciding for the purposes of this regulation whether the further sum is a trivial commutation lump sum within paragraph 7A of Schedule 29, sub-paragraph (2)(c) of that paragraph is to be omitted.
	(4) If this regulation applies to the earlier sum, and only the sums and assets mentioned in paragraph (1)(e) are used in paying the further sum, section 636B of ITEPA 2003 applies in relation to the further sum with the omission of its subsection (3).
	(5) If this regulation applies to the earlier sum, and the sums and assets mentioned in paragraph (1)(e) are used together with other sums and assets in paying the further sum—
	(a) section 636B of ITEPA 2003 applies in relation to the further sum as if instead of the further sum there were two separate trivial commutation lump sums as follows—
	(i) one (“the first part of the further sum”) consisting of so much of the further sum as is attributable to the sums and assets mentioned in paragraph (1)(e), and
	(ii) another consisting of the remainder of the further sum,
	(b) the first part of the further sum is to be treated for the purposes of section 636B of ITEPA 2003 as having been paid immediately before the remainder of the further sum,
	(c) section 636B of ITEPA 2003 applies in relation to the first part of the further sum with the omission of its subsection (3), and
	(d) for the purposes of applying section 636B(3) of ITEPA 2003 in relation to the remainder of the further sum, the rights to which the first part of the further sum relates are to be treated as rights that are not uncrystallised rights immediately before the remainder of the further sum is paid.
	(6) For the purposes of paragraph (1), if the circumstances are as described in paragraph (1)(d)(ii), the member is treated as not having become entitled to the expected pension as a result of the cancelled contract having been entered into.”
	(2) The amendment made by sub-paragraph (1) is to be treated as having been made by the Commissioners for Her Majesty’s Revenue and Customs under the powers to make regulations conferred by section 164(1)(f) and (2) of FA 2004.
	Preservation of protected pension age following certain transfers of pension rights
	7 (1) In paragraph 22 of Schedule 36 to FA 2004 (protection of rights to take benefit before normal minimum pension age) after sub-paragraph (6) insert—
	“(6A) A transfer is also a block transfer if—
	(a) it involves the transfer in a single transaction of all the sums and assets held for the purposes of, or representing accrued rights under, the arrangements under the pension scheme from which the transfer is made which relate to the member,
	(b) the transfer takes place—
	(i) on or after 19 March 2014, and
	(ii) before 6 April 2015, and
	(c) the date mentioned in sub-paragraph (7)(a) is before 6 October 2015.”
	(2) In paragraph 23(6) of Schedule 36 to FA 2004 (meaning of “block transfer”) after “22(6)” insert “and (6A), but for this purpose paragraph 22(6A)(c) is to be read as if its reference to paragraph 22(7)(a) were a reference to sub-paragraph (7) of this paragraph”.
	Operation of enhanced protection of pre-6 April 2006 rights to take lump sums
	8 In paragraph 29 of Schedule 36 to FA 2004 (modifications of paragraph 3 of Schedule 29 to FA 2004 for cases where there is enhanced protection) after sub-paragraph (3) insert—
	“(4) Paragraph 3 applies as if in sub-paragraph (8A)(a) for “is one third of” there were substituted “is—
	where VULSR, VUR and LS have the same meaning as in sub-paragraph (1), and CAPP is”.
	(5) Paragraph 3 applies as if in sub-paragraph (8A)(b) for “is one third of the sums, plus one third of” there were substituted “is—
	where VULSR, VUR and LS have the same meaning as in sub-paragraph (1), and EP is the total of the sums, and”.”
	Protected lump sum entitlement following certain transfers of pension rights
	9 In paragraph 31(8) of Schedule 36 to FA 2004 (“block transfer” has meaning given by paragraph 22(6) of Schedule 36 to FA 2004)—
	(a) after “22(6)” insert “and (6A)”, and
	(b) at the end insert “, and reading paragraph 22(6A)(c) as if its reference to paragraph 22(7)(a) were a reference to sub-paragraph (3) of this paragraph.”
	10 (1) In paragraph 34(2) of Schedule 36 to FA 2004 (modifications required by paragraph 31 in cases involving protected entitlements to lump sums) the sub-paragraphs treated as substituted in paragraph 2 of Schedule 29 to FA 2004 are amended as follows.
	(2) In the substituted sub-paragraph (7A), in the definition of AC, for “(7AA) and (7B))” substitute “(7AA) to (7B))”.
	(3) After the substituted sub-paragraph (7AA) insert—
	“(7AB) Where paragraph 1A applies to the lump sum, AC is the total of—
	(a) the sums held, at the time the lump sum is paid, for the purpose of providing the pension at that time expected to be the pension in connection with which the lump sum is paid, and
	(b) the market value at that time of the assets held at that time for that purpose.
	(7AC) Where paragraph 1B applies to the lump sum, AC is the total of—
	(a) the sums held, at the time the lump sum is paid, for the purpose of providing the expected pension (see paragraph 1B(2)(b)), and
	(b) the market value at that time of the assets held at that time for that purpose.”
	Reporting obligations
	11 (1) In the Registered Pension Schemes (Provision of Information) Regulations 2006 (S.I.2006/567) after regulation 18 insert—
	“Modified operation of these Regulations in the case of certain pre-6 April 2015 lump sums
	19 Lump sums to which paragraph 1B of Schedule 29 applies
	‘(1) Regulations 3 to 18 have effect subject to the following provisions of this regulation.
	(2) Paragraphs (3) to (8) apply if—
	(a) a lump sum is paid by a registered pension scheme (“the paying scheme”) to a member of the scheme,
	(b) paragraph 1B of Schedule 29 applies to the lump sum, and
	(c) the member’s becoming entitled to the actual pension mentioned in paragraph 1B(2)(h) of Schedule 29 has the effect that—
	(i) the member also becomes entitled to the lump sum, and
	(ii) the member’s becoming entitled to the lump sum is a benefit crystallisation event.
	(3) For the purposes of—
	(a) reportable event 6,
	(b) regulation 3 so far as applying by virtue of that event, and
	(c) obligations under regulation 14(1),
	the benefit crystallisation event mentioned in paragraph (2)(c)(ii) is treated as occurring—
	(i) in respect of the scheme to which the transfer mentioned in paragraph 1B(2)(g) of Schedule 29 was made (“the receiving scheme”) and not in respect of the paying scheme, and
	(ii) when the member becomes entitled to the actual pension or, if later, on 5 August 2014.
	(4) For the purposes of regulations 15(2)(a) and 17(5)(a)(i) and (7)(a)(i), that benefit crystallisation event is treated as occurring in respect of the receiving scheme and not in respect of the paying scheme.
	(5) For the purposes of—
	(a) reportable event 7 (but not its definition of “the entitlement amount”),
	(b) reportable event 8, and
	(c) regulation 3 so far as applying by virtue of either of those events,
	the lump sum is treated as having been paid—
	(i) by the receiving scheme and not by the paying scheme, and
	(ii) when the member becomes entitled to the actual pension or, if later, on 5 August 2014.
	(6) For the purposes of reportable event 7 “the entitlement amount” is the total of—
	(a) the sums held, at the time the lump sum is actually paid, for the purpose of providing the expected pension mentioned in paragraph 1B(2)(b) of Schedule 29, and
	(b) the market value at that time of the assets held at that time for that purpose.
	(7) The scheme administrator of the paying scheme is to provide the scheme administrator of the receiving scheme with the following information—
	(a) the date the lump sum was paid,
	(b) the amount of the lump sum,
	(c) the total of—
	(i) the sums held, at the time lump sum is paid, for the purpose of providing the expected pension mentioned in paragraph 1B(2)(b) of Schedule 29, and
	(ii) the market value at that time of the assets held at that time for that purpose, and
	(d) a statement that no further pension commencement lump sum may be paid in connection with that expected pension.
	(8) The scheme administrator of the paying scheme is to comply with its obligations under paragraph (7) before—
	(a) the end of 30 days beginning with the date of the transfer mentioned in paragraph 1B(2)(g) of Schedule 29, or
	(b) if later, the end of 3 September 2014.
	20 Lump sums to which paragraph 1B of Schedule 29 fails to apply
	‘(1) Regulations 3 to 18 have effect subject to the following provisions of this regulation.
	(2) Paragraph (3) applies if—
	(a) a lump sum is paid by a registered pension scheme (“the paying scheme”) to a member of the scheme,
	(b) paragraph 1B of Schedule 29 does not apply to the lump sum, but the conditions in paragraph 1B(2)(a) to (g) are met in the case of the lump sum, and
	(c) as at the end of 5 October 2015 it is the case that the lump sum is to be taken as having been an unauthorised member payment.
	(3) For the purposes of reportable event 1, and regulation 3 so far as applying by virtue of that event, the lump sum is treated as having been paid—
	(a) by the receiving scheme and not by the paying scheme, and
	(b) on 6 October 2015.”
	(2) The amendment made by sub-paragraph (1) is to be treated as having been made by the Commissioners for Her Majesty’s Revenue and Customs under such of the powers cited in the instrument containing the Regulations as are applicable.
	Scheme sanction charges
	12 (1) In section 239(3) of FA 2004 (cases where person other than scheme administrator is liable for a scheme sanction charge)—
	(a) after “But” insert “—
	(a) ”, and
	(b) at the end insert “, and
	(b) in the case of a payment of a lump sum to a member where the conditions in paragraphs 1(1)(b) and (d) and 1B(2)(a) to (g) of Schedule 29 are met, the person liable to the scheme sanction charge so far as relating to any part of the lump sum within the permitted maximum is the scheme administrator of the registered pension scheme to which the transfer mentioned in paragraph 1B(2)(g) of Schedule 29 is made.”
	(2) In section 239 of FA 2004 (scheme sanction charges) after subsection (3) insert—
	“(3A) For the purposes of subsection (3)(b) “the permitted maximum”, in the case of a lump sum paid to an individual, is the amount that in accordance with paragraph 2 of Schedule 29 would be the permitted maximum for that lump sum if the individual became entitled at the time the lump sum is paid to the pension at that time expected to be the pension in connection with which the lump sum is paid.”
	(3) In section 268 of FA 2004 (discharge of liability to scheme sanction charges etc) after subsection (7) insert—
	“(7A) Subsection (7) applies with the omission of its paragraph (a) if the scheme chargeable payment is a payment of a lump sum where the conditions in paragraph 1B(2)(a) to (g) of Schedule 29 are met.”
	(4) In the Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I.2006/572) in article 18 (which provides for paragraph 1(1)(b) of Schedule 29 to FA 2004 to be omitted in certain cases) at the end insert “, and section 239 has effect in the case of a lump sum paid to that individual as if its subsection (3)(b) did not include a reference to paragraph 1(1)(b) of Schedule 29”.
	(5) The amendment made by sub-paragraph (4) is to be treated as made by the Treasury under the powers to make orders conferred by section 283(2) of FA 2004.
	Power to make further adjustments
	13 In section 166 of FA 2004 (payments by registered pension schemes: the lump sum rule) after subsection (4) insert—
	“(5) The Commissioners for Her Majesty’s Revenue and Customs may by regulations amend Part 1 of Schedule 29, or Part 3 of Schedule 36, in connection with cases involving a lump sum within subsection (6).
	(6) A lump sum is within this subsection if—
	(a) the sum is paid on or after 19 September 2013 and before 6 April 2015, or
	(b) the sum is paid before 19 September 2013, a contract for a lifetime annuity is entered into to provide the pension in connection with which the sum is paid, and on or after 19 March 2014 the contract is cancelled.
	(7) The provision that may be made under subsection (5) includes provision altering the effect of amendments made by the Finance Act 2014.”
	14 In section 282(1) and (2) of FA 2004 (making of regulations and orders) for “Board of Inland Revenue” substitute “Commissioners for Her Majesty’s Revenue and Customs”.
	Commencement
	15 The amendments made by paragraphs 1 to 5, 6(1), 7 to 10, 11(1) and 12(1) to (4) of this Schedule are to be treated as having come into force on 19 March 2014.”—
	(Mr Gauke.)
	Brought up, and added to the Bill.

Hire of relevant assets 
	356N Restriction on hire etc of relevant assets to be brought into account
	(1) This section applies if the contractor makes, or is to make, one or more payments under a lease of—
	(a) a relevant asset, or
	(b) part of a relevant asset.
	(2) The total amount that may be brought into account in respect of the payments for the purposes of calculating the contractor’s ring fence profits in an accounting period is limited to the hire cap.
	(3) The “hire cap” is an amount equal to the relevant percentage of TC for the accounting period, subject to subsection (4).
	(4) If payments in relation to which subsection (2) or section 285A(2) (restriction on hire for company carrying on a ring fence trade under Part 8) applies are also made, or to be made, by one or more other companies in respect of the relevant asset or part, the “hire cap” is to be such proportion of the amount mentioned in subsection (3) as is just and reasonable, having regard (in particular) to the amounts of the payments made, or to be made, by the contractor and each other company.
	(5) Subject to subsection (7), the “relevant percentage” is—
	where—
	UROS is the number of days in the accounting period that the relevant asset is provided, operated or used in a relevant offshore service, and
	TU is the number of days in the accounting period that the relevant asset is provided, operated or used (whether or not in a relevant offshore service).
	(6) Accordingly, the relevant percentage is zero if the relevant asset is not provided, operated or used in the accounting period.
	(7) If the accounting period is less than 12 months, the relevant percentage is to be proportionally reduced.
	(8) TC is—
	OC + CE
	(9) Unless subsection (11) applies, OC is the sum of—
	(a) any consideration given for the acquisition of the relevant asset or part when it was first acquired by an associated person, and
	(b) any expenses incurred by an associated person in connection with that acquisition (other than the costs of financing the acquisition).
	This is subject to subsections (12) and (13).
	(10) Subsection (11) applies if the relevant asset or part—
	(a) is leased by an associated person from a person who is not an associated person, and
	(b) has never been owned by an associated person.
	(11) OC is the sum of—
	(a) the consideration that it is reasonable to suppose would have been given for the acquisition of the relevant asset or part, if it had been acquired by an associated person by way of a bargain at arm’s length at the time it was first leased as mentioned in subsection (10)(a), and
	(b) the expenses (other than the costs of financing the acquisition) that it is reasonable to suppose would have been incurred by an associated person in connection with such an acquisition.
	This is subject to subsections (12) and (13).
	(12) If the relevant asset or part was first acquired by an associated person, or (as the case may be) first leased as mentioned in subsection (10)(a), before the beginning of the accounting period, OC does not include any part of the consideration mentioned in subsection (9)(a) or (as the case may be) (11)(a) that it is reasonable to attribute to anything that no longer forms part of the relevant asset or part at the beginning of the accounting period.
	(13) If the relevant asset or part was first acquired by an associated person, or (as the case may be) first leased as mentioned in subsection (10)(a), in the accounting period, OC for the accounting period is—
	where—
	D is the total number of days in the accounting period,
	DBA is the number of days in the accounting period before the day on which the relevant asset or part was first acquired or first leased, and
	OC is the amount given by subsection (9) or (as the case may be) (11).
	(14) CE is capital expenditure on the relevant asset or part (other than capital expenditure in respect of its acquisition or the acquisition of a lease of it) incurred by an associated person—
	(a) after it was first acquired by an associated person or (as the case may be) was first leased as mentioned in subsection (10)(a), and
	(b) before the end of the accounting period.
	This is subject to subsections (15) and (16).
	(15) CE does not include any capital expenditure mentioned in subsection (14) that is—
	(a) incurred before the beginning of the accounting period, and
	(b) not reflected in the state or nature of the relevant asset or part at the beginning of the accounting period.
	(16) If any capital expenditure mentioned in subsection (14) is incurred on a day in the accounting period, the amount of CE for the accounting period in respect of that capital expenditure is—
	where—
	D is the total number of days in the accounting period,
	DBI is the number of days in the accounting period before the day on which that capital expenditure is incurred, and
	CEA is the amount of that capital expenditure.
	356NA Restriction on hire: further provision
	(1) The Treasury may by regulations modify the “relevant percentage” for the purposes of section 356N or 285A.
	(2) Regulations under subsection (1) may—
	(a) amend section 356N or section 285A,
	(b) make different provision for different cases or different purposes, and
	(c) make incidental, consequential, supplementary or transitional provision or savings.
	(3) To the extent that, by virtue of section 356N, payments within subsection (1) of that section cannot be brought into account for the purposes of calculating the contractor’s ring fence profits in an accounting period, the payments may be—
	(a) allowed as a deduction from the contractor’s total profits for the accounting period, or
	(b) treated as a surrenderable amount of the contractor for the accounting period for the purposes of Part 5 (group relief) (see section 99(7)) as if they were a trading loss,
	subject to subsection (4).
	(4) No deduction may be made by virtue of subsection (3) from total profits so far as they are contractor’s ring fence profits or ring fence profits for the purposes of Part 8.
	(5) If an associated person enters into arrangements the main purpose or one of the main purposes of which is to secure that section 356N(2) does not apply in relation to one or more payments to any extent, that provision applies in relation to the payments to the extent it would not otherwise do so.
	(6) In subsection (5) “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).
	Loan relationships 
	356NB Restriction on debits to be brought into account
	(1) Debits may not be brought into account for the purposes of Part 5 of CTA 2009 (loan relationships) in respect of the contractor’s loan relationships in any way that results in a reduction of what would otherwise be the contractor’s ring fence profits, but this is subject to subsections (2) to (4).
	(2) Subsection (1) does not apply so far as a loan relationship is in respect of money borrowed by the contractor which has been—
	(a) used to meet expenditure incurred by the contractor in carrying on oil contractor activities, or
	(b) appropriated to meeting expenditure to be so incurred by the contractor.
	(3) Subsection (1) does not apply, in the case of debits falling to be brought into account as a result of section 329 of CTA 2009 (pre-loan relationship and abortive expenses) in respect of a loan relationship that has not been entered into, so far as the relationship would have been one entered into for the purpose of borrowing money to be used or appropriated as mentioned in subsection (2).
	(4) Subsection (1) does not apply, in the case of debits in respect of a loan relationship to which Chapter 2 of Part 6 of CTA 2009 (relevant non-lending relationships) applies, so far as—
	(a) the payment of interest under the relationship is expenditure incurred as mentioned in subsection (2)(a), or
	(b) the exchange loss arising from the relationship is in respect of a money debt on which the interest payable (if any) is, or would be, such expenditure.
	(5) If a debit—
	(a) falls to be brought into account for the purposes of Part 5 of CTA 2009 in respect of a loan relationship of the contractor, but
	(b) as a result of this section cannot be brought into account in a way that results in any reduction of what would otherwise be the contractor’s ring fence profits,
	the debit is to be brought into account for those purposes as a non-trading debit despite anything in section 297 of that Act.
	(6) References in this section to a loan relationship, in relation to the borrowing of money, do not include a relationship to which Chapter 2 of Part 6 of CTA 2009 (relevant non-lending relationships) applies.
	356NC Restriction on credits to be brought into account
	(1) Credits in respect of exchange gains from the contractor’s loan relationships may not be brought into account for the purposes of Part 5 of CTA 2009 (loan relationships) in any way that results in an increase of what would otherwise be the contractor’s ring fence profits, but this is subject to subsections (2) to (4).
	(2) Subsection (1) does not apply so far as a loan relationship is in respect of money borrowed by the contractor which has been—
	(a) used to meet expenditure incurred by the contractor in carrying on oil contractor activities, or
	(b) appropriated to meeting expenditure to be so incurred by the contractor.
	(3) Subsection (1) does not apply, in the case of credits falling to be brought into account as a result of section 329 of CTA 2009 (pre-loan relationship and abortive expenses) in respect of a loan relationship that has not been entered into, so far as the relationship would have been one entered into for the purpose of borrowing money to be used or appropriated as mentioned in subsection (2).
	(4) Subsection (1) does not apply, in the case of credits in respect of a loan relationship to which Chapter 2 of Part 6 of CTA 2009 (relevant non-lending relationships) applies, so far as—
	(a) the payment of interest under the relationship is expenditure incurred as mentioned in subsection (2)(a), or
	(b) the exchange gain arising from the relationship is in respect of a money debt on which the interest payable (if any) is, or would be, such expenditure.
	(5) If a credit—
	(a) falls to be brought into account for the purposes of Part 5 of CTA 2009 in respect of a loan relationship of the contractor, but
	(b) as a result of this section cannot be brought into account in a way that results in any increase of what would otherwise be the contractor’s ring fence profits,
	the credit is to be brought into account for those purposes as a non-trading credit despite anything in section 297 of that Act.
	(6) Section 356NB(6) applies for the purposes of this section.
	Relief 
	356ND Management expenses
	No deduction under section 1219 of CTA 2009 (expenses of management of a company’s investment business) is to be allowed from the contractor’s ring fence profits.
	356NE Losses
	Relief in respect of a loss incurred by the contractor may not be given under section 37 (relief for trade losses against total profits) against the contractor’s ring fence profits except so far as the loss arises from oil contractor activities.
	356NF Group relief
	(1) On a claim for group relief made by a claimant company in relation to a surrendering company, group relief may not be allowed against the claimant company’s contractor’s ring fence profits except so far as the claim relates to losses incurred by the surrendering company that arose from oil contractor activities.
	(2) In section 105 (restriction on surrender of losses etc within section 99(1)(d) to (g)) the references to the surrendering company’s gross profits of the surrender period do not include the company’s relevant contractor’s ring fence profits for that period.
	(3) The company’s “relevant contractor’s ring fence profits” for that period are—
	(a) if for that period there are no qualifying charitable donations made by the company that are allowable under Part 6 (charitable donations relief), the company’s contractor’s ring fence profits for that period, or
	(b) otherwise, so much of the contractor’s ring fence profits of the company for that period as exceeds the amount of the qualifying charitable donations made by the company that are allowable under section 189 for that period.
	(4) In this section “claimant company” and “surrendering company” are to be read in accordance with Part 5 (group relief) (see section 188).
	356NG Capital allowances
	A capital allowance may not to any extent be given effect under section 259 or 260 of CAA 2001 (special leasing) by deduction from the contractor’s ring fence profits.”
	5 In Schedule 4 (index of defined expressions), insert the following entries at the appropriate places—
	
		
			 “associated person (in Part 8ZA) section 356LB” 
			 “contractor (in Part 8ZA) section 356L(2)” 
			 “contractor’s ring fence profits (in Part 8ZA) section 356LD” 
			 “exploration or exploitation activities (in Part 8ZA) section 356L(4)” 
			 “lease (in Part 8ZA) section 356LC” 
			 “oil contractor activities (in Part 8ZA) section 356L(2)” 
			 “relevant asset (in Part 8ZA) section 356LA” 
			 “relevant offshore area (in Part 8ZA) section 356L(5)” 
			 “relevant offshore service (in Part 8ZA) section 356L(3)” 
		
	
	Commencement etc
	6 This Schedule is to be treated as having come into force on 1 April 2014 (“the commencement date”).7 Section 356L of CTA 2010 has effect in relation to activities carried out on or after the commencement date.
	8 (1) If, on the commencement date, a company was carrying on a trade that consisted of, or included, carrying out oil contractor activities, an accounting period ends (if it would not otherwise do so) with 31 March 2014.
	(2) Sub-paragraph (3) applies if—
	(a) but for sub-paragraph (1), a company would have had an accounting period that began before the commencement date and ended on or after that date (“the split accounting period”), and
	(b) the company’s accounting period beginning with 1 April 2014 ends when the split accounting period would have ended but for that sub-paragraph.
	(3) For the purposes of Chapter 4 of Part 22 of CTA 2010 (surrender of tax refund within group)—
	(a) the company is to be treated as having the split accounting period,
	(b) any tax refund due to the company for—
	(i) the accounting period ending with 31 March 2014, or
	(ii) the accounting period beginning with 1 April 2014,
	is to be treated as if it were a tax refund due to the company for the split accounting period, and
	(c) if the company surrenders a tax refund that is so treated (or part of such a refund), the references in section 964(6) of CTA 2010 to the date on which corporation tax became due and payable are to be treated as references to the date on which corporation tax would have become due and payable had the company had the split accounting period.
	9 (1) A company may be given relief under section 45 of CTA 2010 (carry forward of trade loss against subsequent trade profits) for a loss made in an accounting period ending before the commencement date against profits of a ring fence trade so far as (and only so far as) the loss would have been a loss of the ring fence trade had section 356L of that Act had effect in relation to activities carried out before the commencement date and Part 8ZA therefore applied.
	(2) In sub-paragraph (1) “ring fence trade” means oil contractor activities that constitute a separate trade (whether by virtue of section 356M of that Act or otherwise).”—(Mr Gauke.)
	Brought up, and added to the Bill.

Introduction
	1217F Overview
	‘(1) This Part contains provision about tax relief for production companies in respect of their theatrical productions.
	(2) Sections 1217FA to 1217FC define “production company” and “theatrical production”.
	(3) Section 1217G sets out the conditions a production company must meet to qualify for relief in relation to its theatrical production.
	(4) Section 1217H provides for relief by way of additional deductions in respect of certain expenditure (and section 1217J is about the amount of the additional deduction).
	(5) This Part also contains provision—
	(a) for a company that claims relief to be treated as carrying on a separate trade relating to the theatrical production (see section 1217H(3)), and
	(b) about the calculation of the profits and losses of that trade (see sections 1217I to 1217IF).
	(6) Sections 1217K to 1217KC—
	(a) provide for relief by way of payments (called “theatre tax credits”) to be made on the company’s surrender of certain losses of that trade, and
	(b) set out an upper limit on relief, in connection with State aid legislation.
	(7) Sections 1217LA and 1217LB are about certain cases involving tax avoidance arrangements or arrangements entered into otherwise than for genuine commercial reasons.
	(8) Sections 1217M to 1217MC contain provision about the use of losses of the separate trade (including provision about relief for terminal losses).
	(9) Sections 1217N and 1217NA are concerned with the provisional nature of relief given for periods preceding the period in which the company ceases to carry on the separate theatrical trade.
	1217FA “Theatrical production”
	‘(1) In this Part “theatrical production” means a dramatic production or a ballet (and any ballet is therefore a theatrical production, whether or not it is also a dramatic production).
	But see section 1217FB.
	(2) “Dramatic production” means a production of a play, opera, musical, or other dramatic piece (whether or not involving improvisation) in relation to which the following conditions are met—
	(a) the actors, singers, dancers or other performers are to give their performances wholly or mainly through the playing of roles,
	(b) each performance in the proposed run of performances is to be live, and
	(c) the presentation of live performances is the main object, or one of the main objects, of the company’s activities in relation to the production.
	(3) “Dramatic piece” may also include, for example, a show that is to be performed by a circus.
	(4) For the purposes of this section a performance is “live” if it is to an audience before whom the performers are actually present.
	1217FB Productions not regarded as theatrical
	‘(1) A dramatic production or ballet is not regarded as a theatrical production if—
	(a) the main purpose, or one of the main purposes, for which it is made is to advertise or promote any goods or services,
	(b) the performances are to consist of or include a competition or contest,
	(c) a wild animal is to be used in any performance,
	(d) the production is of a sexual nature (see subsection (3)), or
	(e) the making of a relevant recording is the main object, or one of the main objects, of the company’s activities in relation to the production.
	(2) For the purposes of subsection (1)(c) an animal is used in a performance if the animal performs, or is shown, in the course of the performance.
	(3) A production is of a sexual nature for the purposes of subsection (1)(d) if the performances are to include any content the nature of which is such that, ignoring financial gain, it would be reasonable to assume the content to be included solely or principally for the purpose of sexually stimulating any member of the audience (whether by verbal or other means).
	(4) “Relevant recording” means a recording of a performance—
	(a) as a film (or part of a film) for exhibition to the paying general public at the commercial cinema, or
	(b) for broadcast to the general public.
	(5) In this section—
	“broadcast” means broadcast by any means (including television, radio or the internet);
	“film” has the same meaning as in Part 15 (see section 1181);
	“wild animal” means an animal of a kind which is not commonly domesticated in the British Islands (and in this definition “animal” has the meaning given by section 1(1) of the Animal Welfare Act 2006).
	1217FC “Production company”
	‘(1) A company is the production company in relation to a theatrical production if the company (acting otherwise than in partnership)—
	(a) is responsible for producing, running and closing the theatrical production,
	(b) is actively engaged in decision-making during the production, running and closing phases,
	(c) makes an effective creative, technical and artistic contribution to the production, and
	(d) directly negotiates for, contracts for and pays for rights, goods and services in relation to the production.
	(2) No more than one company can be the production company in relation to a theatrical production.
	(3) If more than one company meets the conditions in subsection (1) in relation to a theatrical production, the company that is most directly engaged in the activities mentioned in subsection (1) is the production company.
	(4) If there is no company meeting the conditions in subsection (1), there is no production company in relation to the production.
	Companies qualifying for relief 
	1217G How a company qualifies for relief
	‘(1) A company qualifies for relief in relation to a theatrical production if—
	(a) it is the production company in relation to the production, and
	(b) the commercial purpose condition (see section 1217GA) and the EEA expenditure condition (see section 1217GB) are met.
	(2) There is further provision relating to subsection (1) in section 1217LA (tax avoidance arrangements).
	1217GA The commercial purpose condition
	‘(1) The “commercial purpose condition” is that at the beginning of the production phase the company intends that all, or a high proportion of, the live performances that it proposes to run will be—
	(a) to paying members of the general public, or
	(b) provided for educational purposes.
	(2) The reference in subsection (1) to “live performances” is to be read in accordance with section 1217FA(4).
	(3) A performance is not regarded as provided for educational purposes if the production company is, or is associated with, a person who—
	(a) has responsibility for the beneficiaries, or
	(b) is otherwise connected with the beneficiaries (for instance, by being their employer).
	(4) For the purposes of subsection (3), a production company is associated with a person (“P”) if—
	(a) P controls the production company, or
	(b) P is a company which is controlled by the production company or by a person who also controls the production company.
	(5) In this section—
	“the beneficiaries” means persons for whose benefit the performance will or may be provided;
	“control” has the same meaning as in Part 10 of CTA 2010 (see section 450 of that Act).
	1217GB The EEA expenditure condition
	‘(1) The “EEA expenditure condition” is that at least 25% of the core expenditure on the theatrical production incurred by the company is EEA expenditure.
	(2) In this Part “EEA expenditure” means expenditure on goods or services that are provided from within the European Economic Area.
	(3) Any apportionment of expenditure as between EEA and non-EEA expenditure for the purposes of this Part is to be made on a just and reasonable basis.
	(4) The Treasury may by regulations—
	(a) amend the percentage specified in subsection (1);
	(b) amend subsection (2).
	(5) See also sections 1217N and 1217NA (which are about the giving of relief provisionally on the basis that the EEA expenditure condition will be met).
	1217GC “Core expenditure”
	‘(1) In this Part “core expenditure”, in relation to a theatrical production, means expenditure on the activities involved in—
	(a) producing the production, and
	(b) closing the production.
	(2) The reference in subsection (1)(a) to “expenditure on the activities involved in producing the production”—
	(a) does not include expenditure on any matters not directly involved in producing the production (for instance, financing, marketing, legal services or storage);
	(b) does not include expenditure on the ordinary running of the production; but expenditure incurred on or after the date of the first performance of the production to the paying general public may fall within subsection (1)(a) (for instance, if it is incurred in connection with a substantial recasting or a substantial redesign of the set).
	Claim for additional deduction 
	1217H Claim for additional deduction
	‘(1) A company which qualifies for relief in relation to a theatrical production may claim an additional deduction in relation to the production.
	(2) A claim under subsection (1) is made with respect to an accounting period.
	(See Schedule 18 to FA 1998, and in particular, Part 9D, for provision about the procedure for making claims.)
	(3) Where a company has made a claim under subsection (1)—
	(a) the company’s activities in relation to the theatrical production are treated for corporation tax purposes as a trade separate from any other activities of the company (including activities in relation to any other theatrical production), and
	(b) the company is entitled to make an additional deduction, in accordance with section 1217J, in calculating the profit or loss of the separate trade for the accounting period concerned.
	(4) The company is treated as beginning to carry on the separate trade—
	(a) when the production phase begins, or
	(b) if earlier, at the time of the first receipt by the company of any income from the theatrical production.
	(5) Where the company tax return in which a claim under subsection (1) is made is for an accounting period later than that in which the company begins to carry on the separate trade, the company must make any amendments of company tax returns for earlier periods that may be necessary.
	(6) Any amendment or assessment necessary to give effect to subsection (5) may be made despite any limitation on the time within which an amendment or assessment may normally be made.
	(7) If the company ceases at any time to meet the conditions in section 1217FC(1) (meaning of “production company”) in relation to the production, it is treated as ceasing to carry on the separate trade at that time.
	The separate theatrical trade 
	1217I Introduction to sections 1217IA to 1217IF
	‘(none) Where a company is treated under section 1217H(3)(a) as carrying on a separate trade (“the separate theatrical trade”), the profits or losses of the trade are calculated for corporation tax purposes in accordance with sections 1217IA to 1217IF.
	1217IA Calculation of profits or losses of separate theatrical trade
	‘(1) For the first period of account during which the separate theatrical trade is carried on, the following are brought into account—
	(a) as a debit, the costs of the theatrical production incurred (and represented in work done) to date;
	(b) as a credit, the proportion of the estimated total income from the production treated as earned at the end of that period.
	(2) For subsequent periods of account the following are brought into account—
	(a) as a debit, the difference between the amount (“C”) of the costs of the theatrical production incurred (and represented in work done) to date and the amount corresponding to C for the previous period, and
	(b) as a credit, the difference between the proportion (“PI”) of the estimated total income from the production treated as earned at the end of that period and the amount corresponding to PI for the previous period.
	(3) The proportion of the estimated total income treated as earned at the end of a period of account is—
	where—
	C is the total to date of costs incurred (and represented in work done);
	T is the estimated total cost of the theatrical production;
	I is the estimated total income from the theatrical production.
	1217IB Income from the production
	‘(1) References in this Part to income from a theatrical production are to any receipts by the company in connection with the making or exploitation of the production.
	(2) This includes—
	(a) receipts from the sale of tickets or of rights in the theatrical production;
	(b) royalties or other payments for use of aspects of the theatrical production (for example, characters or music);
	(c) payments for rights to produce merchandise;
	(d) receipts by the company by way of a profit share agreement.
	(3) Receipts that (apart from this subsection) would be regarded as being of a capital nature are treated as being of a revenue nature.
	1217IC Costs of the production
	‘(1) References in this Part to the costs of a theatrical production are to expenditure incurred by the company on—
	(a) the activities involved in developing, producing, running and closing the production, or
	(b) activities with a view to exploiting the production.
	(2) This is subject to any provision of the Corporation Tax Acts prohibiting the making of a deduction, or restricting the extent to which a deduction is allowed, in calculating the profits of a trade.
	(3) Expenditure which, apart from this subsection, would be regarded as being of a capital nature only because it is incurred on the creation of an asset (i.e. the theatrical production) is treated as being of a revenue nature.
	1217ID When costs are taken to be incurred
	‘(1) For the purposes of this Part, the costs that have been incurred on a theatrical production at a given time—
	(a) are those costs of the production that are represented in the state of completion of the work in progress, but
	(b) do not include any amount that has not been paid unless it is the subject of an unconditional obligation to pay.
	(2) In accordance with subsection (1)(a)—
	(a) payments in advance of work to be done are ignored until the work has been carried out;
	(b) deferred payments are recognised to the extent that the goods or services in question are represented in the state of completion of the work in progress (but this is subject to subsection (1)(b)).
	(3) Where an obligation to pay an account is linked to income being earned from the theatrical production, the obligation is not treated as having become unconditional unless an appropriate amount of income is or has been brought into account under section 1217IA.
	(4) In determining for the purposes of this Part the amount of costs incurred on a theatrical production at the end of a period of account, any amount that has not been paid 4 months after the end of that period is to be ignored.
	1217IE Pre-trading expenditure
	‘(1) This section applies if, before the company begins to carry on the separate theatrical trade, it incurs expenditure on activities falling within section 1217IC(1)(a).
	(2) The expenditure may be treated as expenditure of the separate theatrical trade and as if incurred immediately after the company begins to carry on that trade.
	(3) If expenditure so treated has previously been taken into account for other tax purposes, the company must amend any relevant company tax return accordingly.
	(4) Any amendment or assessment necessary to give effect to subsection (3) may be made despite any limitation on the time within which an amendment or assessment may normally be made.
	1217IF Estimates
	Estimates for the purposes of section 12171A must be made as at the balance sheet date for each period of account, on a just and reasonable basis taking into consideration all relevant circumstances.
	Amount of additional deduction 
	1217J Amount of additional deduction
	‘(1) The amount of an additional deduction to which a company is entitled as a result of a claim under section 1217H is calculated as follows.
	(2) For the first period of account during which the separate theatrical trade is carried on, the amount of the additional deduction is E, where—
	E is—
	(a) so much of the qualifying expenditure incurred to date as is EEA expenditure, or(b) if less, 80% of the total amount of qualifying expenditure incurred to date.
	(3) For any period of account after the first, the amount of the additional deduction is—
	E – P
	where—
	E is—
	(a) so much of the qualifying expenditure incurred to date as is EEA expenditure, or(b) if less, 80% of the total amount of qualifying expenditure incurred to date, and
	P is the total amount of the additional deductions given for previous periods.
	(4) The Treasury may by regulations amend the percentage specified in subsection (2) or (3).
	1217JA “Qualifying expenditure”
	‘(1) In this Part “qualifying expenditure”, in relation to a theatrical production, means core expenditure (see section 1217GC) on the theatrical production that—
	(a) falls to be taken into account under sections 1217IA to 1217IF in calculating the profit or loss of the separate theatrical trade for tax purposes, and
	(b) is not excluded by subsection (2).
	(2) The following expenditure is excluded—
	(a) expenditure in respect of which the company is entitled to an R&D expenditure credit under Chapter 6A of Part 3;
	(b) expenditure in respect of which the company has obtained relief under Part 13 (additional relief for expenditure on research and development).
	Theatre tax credits 
	1217K Theatre tax credit claimable if company has surrenderable loss
	‘(1) A company which—
	(a) is treated under section 1217H(3) as carrying on a separate trade during the whole or part of an accounting period, and
	(b) has a surrenderable loss in that period,
	may claim a theatre tax credit for that accounting period.
	(2) Section 1217KA sets out how to calculate the amount of any surrenderable loss that the company has in the accounting period.
	(3) A company making a claim may surrender the whole or part of its surrenderable loss in the accounting period.
	(4) The amount of the theatre tax credit to which a company making a claim is entitled for the accounting period is—
	(a) 25% of the amount of the loss surrendered if the theatrical production is a touring production, or
	(b) 20% of the amount of the loss surrendered if the theatrical production is not a touring production.
	(5) The company’s available loss for the accounting period (see section 1217KA(2)) is reduced by the amount surrendered.
	(6) A theatrical production is a “touring production” only if the company intends at the beginning of the production phase—
	(a) that it will present performances of the production in 6 or more separate premises, or
	(b) that it will present performances of the production in at least two separate premises and that the number of performances will be at least 14.
	(7) See Schedule 18 to FA 1998 (in particular, Part 9D) for provision about the procedure for making claims under subsection (1).
	1217KA Amount of surrenderable loss
	‘(1) The company’s surrenderable loss in the accounting period is—
	(a) the company’s available loss for the period in the separate theatrical trade (see subsections (2) and (3)), or
	(b) if less, the available qualifying expenditure for the period (see subsections (4) and (5)).
	(2) The company’s available loss for an accounting period is—
	where—
	L is the amount of the company’s loss for the period in the separate theatrical trade, and
	RUL is the amount of any relevant unused loss of the company (see subsection (3)).
	(3) The “relevant unused loss” of a company is so much of any available loss of the company for the previous accounting period as has not been—
	(a) surrendered under section 1217K, or
	(b) carried forward under section 45 of CTA 2010 and set against profits of the separate theatrical trade.
	(4) For the first period of account during which the separate theatrical trade is carried on, the available qualifying expenditure is the amount that is E for that period for the purposes of section 1217J(2).
	(5) For any period of account after the first, the available qualifying expenditure is—
	E – S
	where—
	E is the amount that is E for that period for the purposes of section 1217J(3), and
	S is the total amount previously surrendered under section 1217K.
	(6) If a period of account of the separate theatrical trade does not coincide with an accounting period, any necessary apportionments are to be made by reference to the number of days in the periods concerned.
	1217KB Payment in respect of theatre tax credit
	‘(1) If a company—
	(a) is entitled to a theatre tax credit for an accounting period, and
	(b) makes a claim,
	the Commissioners for Her Majesty’s Revenue and Customs (“the Commissioners”) must pay the amount of the credit to the company.
	(2) An amount payable in respect of—
	(a) a theatre tax credit, or
	(b) interest on a theatre tax credit under section 826 of ICTA,
	may be applied in discharging any liability of the company to pay corporation tax.
	To the extent that it is so applied the Commissioners’ liability under subsection (1) is discharged.
	(3) If the company’s company tax return for the accounting period is enquired into by the Commissioners, no payment in respect of a theatre tax credit for that period need be made before the Commissioners’ enquiries are completed (see paragraph 32 of Schedule 18 to FA 1998).
	In those circumstances the Commissioners may make a payment on a provisional basis of such amount as they consider appropriate.
	(4) No payment need be made in respect of a theatre tax credit for an accounting period before the company has paid to the Commissioners any amount that it is required to pay for payment periods ending in that accounting period—
	(a) under PAYE regulations,
	(b) under section 966 of ITA 2007 (visiting performers), or
	(c) in respect of Class 1 national insurance contributions under Part 1 of the Social Security Contributions and Benefits Act 1992 or Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.
	(5) A payment in respect of a theatre tax credit is not income of the company for any tax purpose.
	1217KC Limit on State aid
	‘(1) The total amount of any theatre tax credits payable under section 1217KB in the case of any undertaking is not to exceed 50 million euros per year.
	(2) In this section “undertaking” has the same meaning as in the General Block Exemption Regulation.
	(3) In this section “the General Block Exemption Regulation” means any regulation that—
	(a) is for the time being in force under Article 1 of Council Regulation (EC) No 994/98, and
	(b) makes, in relation to aid in favour of culture and heritage conservation, the declaration provided for by that Article.
	Anti-avoidance etc 
	1217LA Tax avoidance arrangements
	‘(1) A company does not qualify for relief in relation to a theatrical production if there are any tax avoidance arrangements relating to the production.
	(2) Arrangements are “tax avoidance arrangements” if their main purpose, or one of their main purposes, is the obtaining of a tax advantage.
	(3) In this section—
	“arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable;
	“tax advantage” has the meaning given by section 1139 of CTA 2010.
	1217LB Transactions not entered into for genuine commercial reasons
	‘(1) A transaction is to be ignored for the purpose of determining a relief mentioned in subsection (2) so far as the transaction is attributable to arrangements (other than tax avoidance arrangements) entered into otherwise than for genuine commercial reasons.
	(2) The reliefs mentioned in subsection (1) are—
	(a) any additional deduction which a company may make under this Part, and
	(b) any theatre tax credit to be given to a company.
	(3) In this section “arrangements” and “tax avoidance arrangements” have the same meaning as in section 1217LA.
	Use of losses 
	1217M Application of sections 1217MA to 1217MC
	‘(1) Sections 1217MA to 1217MC apply to a company that is treated under section 1217H(3) as carrying on a separate trade in relation to a theatrical production.
	(2) In those sections—
	“the completion period” means the accounting period in which the company ceases to carry on the separate theatrical trade;
	“loss relief” includes any means by which a loss might be used to reduce the amount in respect of which a company, or any other person, is chargeable to tax.
	1217MA Restriction on use of losses before completion period
	‘(1) Subsection (2) applies if a loss is made by the company in the separate theatrical trade in an accounting period preceding the completion period.
	(2) The loss is not available for loss relief, except to the extent that the loss may be carried forward under section 45 of CTA 2010 to be set against profits of the separate theatrical trade in a subsequent period.
	1217MB Use of losses in the completion period
	‘(1) Subsection (2) applies if a loss made in the separate theatrical trade is carried forward under section 45 of CTA 2010 to the completion period.
	(2) So much (if any) of the loss as is not attributable to relief under section 1217H (see subsection (4)) may be treated for the purposes of loss relief as if it were a loss made in the completion period.
	(3) If a loss is made in the separate theatrical trade in the completion period, the amount of the loss that may be—
	(a) deducted from total profits of the same or an earlier period under section 37 of CTA 2010, or
	(b) surrendered as group relief under Part 5 of that Act,
	is restricted to the amount (if any) that is not attributable to relief under section 1217H.
	(4) The amount of a loss in any period that is attributable to relief under section 1217H is found by—
	(a) calculating what the amount of the loss would have been if there had been no additional deduction under that section in that or any earlier period, and
	(b) deducting that amount from the total amount of the loss.
	(5) This section does not apply to loss surrendered, or treated as carried forward, under section 1217MC (terminal losses).
	1217MC Terminal losses
	‘(1) This section applies if—
	(a) the company ceases to carry on the separate theatrical trade, and
	(b) if the company had not ceased to carry on the separate theatrical trade, it could have carried forward an amount under section 45 of CTA 2010 to be set against profits of that trade in a later period (“the terminal loss”).
	Below in this section the company is referred to as “company A” and the separate theatrical trade is referred to as “trade 1”.
	(2) If company A—
	(a) is treated under section 1217H(3) as carrying on a separate theatrical trade in relation to another theatrical production (“trade 2”), and
	(b) is carrying on trade 2 when it ceases to carry on trade 1,
	company A may (on making a claim) elect to transfer the terminal loss (or a part of it) to trade 2.
	(3) If company A makes an election under subsection (2), the terminal loss (or part of the loss) is treated as if it were a loss brought forward under section 45 of CTA 2010 to be set against the profits of trade 2 of the first accounting period beginning after the cessation and so on.
	(4) Subsection (5) applies if—
	(a) another company (“company B”) is treated under section 1217H(3) as carrying on a separate theatrical trade (“company B’s trade”) in relation to another theatrical production,
	(b) company B is carrying on that trade when company A ceases to carry on trade 1, and
	(c) company B is in the same group as company A for the purposes of Part 5 of CTA 2010 (group relief).
	(5) Company A may surrender the loss (or part of it) to company B.
	(6) On the making of a claim by company B the amount surrendered is treated as if it were a loss brought forward by company B under section 45 of CTA 2010 to be set against the profits of company B’s trade of the first accounting period beginning after the cessation and so on.
	(7) The Treasury may by regulations make administrative provision in relation to the surrender of a loss under subsection (5) and the resulting claim under subsection (6).
	(8) “Administrative provision” means provision corresponding, subject to such adaptations or other modifications as appear to the Treasury to be appropriate, to that made by Part 8 of Schedule 18 to FA 1998 (company tax returns: claims for group relief).
	Provisional entitlement to relief 
	1217N Provisional entitlement to relief
	‘(1) In relation to a company that has made a claim under section 1217H in relation to a theatrical production, “interim accounting period” means any accounting period that—
	(a) is one in which the company carries on the separate theatrical trade, and
	(b) precedes the accounting period in which it ceases to do so.
	(2) A company is not entitled to relief under any of the relieving provisions for an interim accounting period unless—
	(a) its company tax return for the period states the amount of planned core expenditure on the theatrical production that is EEA expenditure, and
	(b) that amount is such as to indicate that the EEA expenditure condition (see section 1217GB) will be met in relation to the production.
	If those requirements are met, the company is provisionally treated in relation to that period as if the EEA expenditure condition were met.
	(3) In this section “the relieving provisions” means—
	(a) section 1217H (additional deduction),
	(b) section 1217K (theatre tax credits), and
	(c) section 1217MC (terminal losses).
	1217NA Clawback of provisional relief
	‘(1) If a statement is made under section 1217N(2) but it subsequently appears that the EEA expenditure condition will not be met on the company’s ceasing to carry on the separate theatrical trade, the company—
	(a) is not entitled to relief under any of the relieving provisions for any period for which its entitlement depended on such a statement, and
	(b) must amend its company tax return for any such period accordingly.
	(2) When a company which has made a claim under section 1217H ceases to carry on the separate theatrical trade, the company’s company tax return for the period in which that cessation occurs must—
	(a) state that the company has ceased to carry on the separate theatrical trade, and
	(b) be accompanied by a final statement of the amount of the core expenditure on the theatrical production that is EEA expenditure.
	(3) If that statement shows that the EEA expenditure condition is not met—
	(a) the company is not entitled to relief under any of the relieving provisions for any period,
	(b) the company is treated for corporation tax purposes as if section 1217H(3)(a) (treatment as a separate trade) did not apply in relation to the theatrical production for any period, and
	(c) accordingly, sections 1217MA and 1217MB (provisions about use of losses) do not apply in relation to the theatrical production for any period.
	(4) Where subsection (3) applies, the company must amend its company tax return for any period in which (or in any part of which) it was treated as carrying on a separate trade relating to the theatrical production.
	(5) Any amendment or assessment necessary to give effect to this section may be made despite any limitation on the time within which an amendment or assessment may normally be made.
	(6) In this section “the relieving provisions” has the same meaning as in section 1217N.
	Interpretation 
	1217O Activities involved in developing, producing, running or closing a production
	‘(none) The Treasury may by regulations amend section 1217GC (core expenditure) or 1217IC (costs of production) for the purpose of providing that activities of a specified description are, or are not, to be regarded as activities involved in developing or (as the case may be) producing, running or closing—
	(a) a theatrical production, or
	(b) a theatrical production of a specified description.
	1217OA “Company tax return”
	‘(none) In this Part “company tax return” has the same meaning as in Schedule 18 to FA 1998 (see paragraph 3(1) of that Schedule).
	1217OB Index
	‘(none) In this Part—
	“commercial purpose condition” has the meaning given by section 1217GA;
	“company tax return” has the meaning given by section 1217OA;
	“core expenditure” has the meaning given by section 1217GC;
	“costs”, in relation to a theatrical production, has the meaning given by section 1217IC;
	“EEA expenditure” has the meaning given by section 1217GB;
	“EEA expenditure condition” has the meaning given by section 1217GB;
	references to “income from a theatrical production” are to be read in accordance with section 1217IB;
	“production company” has the meaning given by section 1217FC;
	“qualifying expenditure” has the meaning given by section 1217JA;
	references to the “separate theatrical trade” are to be read in accordance with section 1217I;
	“theatrical production” has the meaning given by section 1217FA (read with section 1217FB).”